UK: National Debt And Deficit Rising Exponentially As Cuts Didn’t Work

Chancellor George Osborne has his tail between his legs today as the coalition has failed to reach their deficit reduction targets.

Despite crippling cuts, overall the government is actually borrowing more than ever. In fact, mathematically speaking, there has been NO reduction in government spending at all, and the deficit is rising by around £120 billion per year [1].

Initially the Conservatives claimed the deficit (the amount of extra debt that’s added on to the total national debt each year) would begin falling by 2015-16, thanks to their austerity drive to slash public services and the welfare bill. However, today Osborne announced that this forecast will have to be pushed back to 2016-17, and independent analysts say even then it’s highly unlikely that a reduction will be reached [2].

What this means is that successive governments have borrowed so much that the cost of interest payments on the debt and maintaining front-line public services has reached a level where it is virtually impossible to prevent further borrowing and further debt. Britain has fallen off the deep end.

The reality is that we’re £4.8 trillion in the red (including unfunded pension costs [3]). Any rhetoric from the coalition or Labour is simply hot air. While George Osborne accepted today during his autumn statement that there are ‘no miracle cures’, he proceeded to pretend that he could actually do something about the problem.

Really there are only two options. A real cut to public spending, which would completely decimate the middle and lower classes. Take the current level of cuts and multiply it by oblivion. Or a systematic change to the financial system and the method by which the government raises finance.

So far the big three parties have all chosen austerity, despite it being abundantly clear that the current method of taxation and borrowing does not work.

The amount raised by taxation comes nowhere near the amount needed to fund the ideology of our modern leaders, who are hell bent on European integration, perpetual war and corporate collusion. The borrowing they undertake to make up the difference is also out of control and is ultimately the burden of the general public anyway.

Ignoring this reality, Osborne outlined plans to push forward with around £15bn in extra cuts [4]. This will apparently come from the welfare budget, which has already been cut by an unrealistic £10bn. Other pitiful ideas being tossed around are a Mansion Tax, putting pressure on tax avoiders (a meaningless proposal unless the law is changed) and cutting tax relief on pensions. He also suggested a further 1% cut to corporation tax, to get businesses moving again.

Whether it’s cluelessness, denial or conspiracy, the journey to 2017 is not going to be a fun one.